By way of a direct listing, Coinbase plans to go public, the company revealed today in a blog post.
Established in 2012, the cryptocurrency exchange allows users to purchase and trade decentralized tokens such as bitcoin and ethereum. As a private company, the firm has raised over $540 million in funding.
The company reported last month that it had confidentially lodged an S-1 with the SEC.
The public has not seen the company’s financials yet, but we now know it has opted out of the conventional IPO process. Direct listings have been rising in popularity steadily. And it’s not too shocking to see a business like Coinbase opt for this route to public markets, considering some outsized first day pops from recent tech IPOs.
In going this road, the business is not alone. After analyzing the late-2020 IPO market, Roblox postponed his offering, opting for a direct listing of his own.
To go public confidentially and we’re hyped, Coinbase files
By eliminating the need to price and sell a block of new equity, direct listings allow businesses to bypass elements of the conventional IPO. Alternatively, a corporation lists its shares, which then become available for trading. Not every organization, of course, has a good profile for the system to prove attractive, and the direct listing entity loses its ability to raise new primary capital; the most well-known and wealthiest companies may find the most beautiful natural listings.
Recent months have been very friendly with tech IPOs, with investors rushing to fund technology companies who are prepared to assist with what’s been called the “digital transformation.” And when it starts to trade, Coinbase will find itself in a reasonably advantageous position with the cryptocurrency markets matching the public needs for froth.
There is a general connection between the interest of customers in cryptocurrencies, the amount of trading, and the bitcoin price. It is not a stretch to conclude that a recent increase in the price of bitcoin and its peers has improved Coinbase’s financial results, as Coinbase generates revenue from trading users.
The announcement by Coinbase came as Qualtrics, a software firm, went public today. In today’s trading alone, its shares have rallied almost 50%. More so when the cryptocurrency business withdraws a public S-1 filing.